This was an appeal against the judgment of a Civil Judge, Senior Division, Panvel, dismissing the appellant's claim as time-barred.

The appellant purchased 32.48 mt of hydrobromic acid from First Intercontinental Corp (First), a US company. First shipped two containers containing 112 drums of acid on the respondent's vessel, SS Orient Triumph, under a bill of lading issued by the respondent. The vessel arrived at Nhava-Sheva Port on 24 August 1993. However, the Import General Manifest prepared by the respondent did not correctly state the container details. The containers were attached by Customs as there was a violation of the Customs Act. There was a delay in releasing one of the containers. The other container was confiscated by Customs. The appellant sued for damages.

The Civil Judge, Senior Division, Panvel, after considering art 3.6 of the Hague Rules and the provisions of the Carriage of Goods by Sea Act 1925 (the Act), came to the conclusion that since the goods were not delivered on the due date, and since the suit was not instituted within a period of 12 months, the respondent stood discharged from its liability in respect of the loss or damage. The appellant appealed.

The appellant argued that the lower Court erred in relying on the Act and art 3.6 of the Rules in the Schedule of the Act. The appellant submitted that the Act was not applicable to the importation of goods. Even though the Act was passed to incorporate the Rules of the International Conference on Maritime Law held at Brussels in 1922, known as the Hague Rules, it only applied in connection with the carriage of goods by sea in a ship carrying goods from any port in India to another port, whether in or outside India. The appellant argued that its suit was governed by s 11 of the Indian Limitation Act, and that the period of limitation was 3 years.

Held: Appeal dismissed.

The appellant's submission that the provisions of the Indian Carriage of Goods by Sea Act 1925 are not applicable to the import of goods is valid in view of the decision of the Supreme Court in British India Steam Navigation Co Ltd v Shanmughavilas Cashew Industries [1990] INSC 86 (CMI897):

Under Section 2 of that Act which deals with application of rules it is provided: 'Subject to the provisions of this Act, the rules set out in the Schedule (hereinafter referred to as "the Rules") shall have the effect in relation to and in connection with the carriage of goods by sea in ships carrying goods from any port in India to any other port whether in or outside India.' To apply the Rules to a case, the Port of origin has to be an Indian port. Unless the starting point or the port of loading is a port in India the Rules are inapplicable. These Rules have no application when goods are not carried from any Indian Port. As in the instant case goods were shipped in Africa and carried to Cochin, this Act obviously was not applicable.

Thus, the lower Court committed an error in applying the Act.

However, the respondent submitted that the contract between the parties is governed by the bill of lading, and the bill of lading incorporates the unamended Hague Rules as a part of the contract. On that basis, art 3.6 of the Hague Rules will apply, and since the suit has not been brought within one year after the delivery of the goods or the date when the goods should have been delivered, the respondent stands discharged from all liabilities in respect of the loss or damage.

The appellant accepted that the contractual relationship arising between the parties is on the basis of the bill of lading. The appellant submitted that the Hague Rules, which were framed in 1924, have been amended by the Visby Protocol in 1968 and the SDR Protocol in 1979, and thus included the amendment carried out to art 3.6 of the Hague Rules where the following words were added: 'This period, may however, be extended if the parties so agree after the cause of action has arisen'. Relying on this part of the amended Rules, the appellant submitted that by implied agreement between the parties the period was extended, and the suit filed by the appellant was within limitation. Alternatively, the appellant submitted that art 3.6 of the unamended Hague Rules is void and inapplicable in India in view of s 28 of the Contract Act.

From the definition of the 'Hague Rules' in the bill of lading, it is clear that only if amendments are compulsorily applicable to the bill of lading will they be applicable. It is further made crystal clear that nothing in the bill of lading shall be construed as contractually applying the Rules as amended by any other Protocol. It cannot be inferred that the Hague Rules, as amended in 1968 and 1979, were applicable to the parties.

As to whether art 3.6 of the unamended Hague Rules is voided by s 28 of the Contract Act, this point has been decided by the Supreme Court in National Insurance Co Ltd v Sujir Ganesh Nayak & Co AIR 1997 SC 2049, (1997) 4 SCC 366 [16]:

From the case-law referred to above the legal position that emerges is that an agreement which in effect seeks to curtail the period of limitation and prescribes a shorter period than that prescribed by law would be void as offending Section 28 of the Contract Act. That is because such an agreement would seek to restrict the party from enforcing his right in Court after the period prescribed under the agreement expires even though the period prescribed by law for the enforcement of his right has yet not expired. But there could be agreements which do not seek to curtail the time for enforcement of the right but which provides for the forfeiture or waiver of the right itself if no action is commenced within the period stipulated by the agreement. Such a clause in the agreement would not fall within the mischief of Section 28 of the Contract Act. To put it differently, curtailment of the period of limitation is not permissible view of Section 28, but extinction of the right itself unless exercised within a specified time is permissible and can be enforced. If the policy of insurance provides that if a claim is made and rejected and no action is commenced within the time stated in the policy, the benefits flowing from the policy shall stand extinguished and any subsequent action would be time-barred. Such a clause would fall outside the scope of Section 28 of the Contract Act. This, in brief, seems to be the settled legal position.

Article 3.6 is thus not voided by s 28 of the Contract Act. That view is supported by the ruling of the Supreme Court in East & West Steamship Co v SK Ramalingam AIR 1960 SC 1058, which held that this provision operates to extinguish liability and does not curtail the remedy available under the law.

The question that then arises is when time starts to run to extinguish the carrier's liability. Time starts to run from the date of delivery of the goods or from the date when the goods should have been delivered. In this case, it is an admitted fact that the ship arrived on 24 August 1993, and Customs seized the containers. Thus, the cause of action for non-delivery of the containers arose on that date. It was evident that delivery of the containers could not take place because of the defective documentation. The ship left immediately after the goods were seized by Customs. Therefore, when the suit was filed, the right to claim was extinguished, and the suit was not maintainable.